Form 24 Income Tax Rules 2026 pdf download and Key points
Form 24 Income Tax Rules 2026 pdf download and Key points
FORM NO. 24
[See rule 43]
Audit Report under section 59 for computation of royalty and fee for technical services in the case of nonresident (not being a company) or a foreign company
Under the Income-tax Rules, 2026, Form No. 24 replaces the erstwhile Form 3CE. It is governed by Section 59(4) of the Income-tax Act, 2025, and Rule 43 of the Income-tax Rules, 2026.
Here are all the key points regarding Form No. 24:
1. Purpose of the Form Form 24 is a statutory audit report used to certify the correct computation of income for non-residents or foreign companies that earn income by way of Royalty or Fees for Technical Services (FTS) through a Permanent Establishment (PE) or fixed place of profession in India. It ensures that only those expenses attributable to the PE are deducted.
2. Applicability (Who Should File)
- Target Taxpayers: It must be filed by non-resident individuals, foreign companies, or any other non-resident entities earning royalty or FTS under an agreement with the Indian government or an Indian concern, provided this income is effectively connected to a PE in India.
- Who Certifies: The form must be strictly audited and certified by an independent Accountant (such as a Chartered Accountant) as defined under Section 515(3)(b) of the Act.
- Is it Mandatory? Yes, furnishing Form 24 is compulsory if the assessee is claiming the computation of such income under Section 59.
3. Frequency and Due Dates
- Frequency: It is required to be furnished annually.
- Due Date: It must be filed at least one month prior to the due date for furnishing the return of income under Section 263(1) of the Income-tax Act, 2025.
4. Structure of the Form The form is structured to capture detailed audit findings, comprising:
- Main Audit Report: The core certification where the accountant verifies the royalty/FTS amount and its effective connection to the PE.
- Annexure – Part A: General particulars of the assessee (Name, Address, PAN).
- Annexure A-2: Details and a copy of the agreement.
- Annexure A-3: A specific note on intangibles/contracts.
- Annexure A-4: A specific note on the activities of the Permanent Establishment.
5. Mandatory Documents Required To prepare and file Form 24, the certifying Chartered Accountant requires:
- Complete books of account and records of the PE or fixed place of profession.
- Agreements relating to the royalty or FTS.
- Invoices, work orders, and project reports.
- Details of the global and India-specific allocation of expenses, including head office expenditures.
6. Filing Process and Verification
- Accountant’s Role: The accountant examines the compiled income and expenses, fills out the electronic form on the e-filing portal, and must generate and quote a Unique Document Identification Number (UDIN), along with their Membership Number and Firm Registration Number (FRN).
- Digital Authentication: The accountant signs the form using a Digital Signature Certificate (DSC).
- Taxpayer’s Role: After the accountant uploads the form, the non-resident assessee must log into their own portal and formally “Accept” the form to complete the submission.
7. Outcome and Significance Submitting Form 24 is highly significant because it enables the tax authorities to assess the royalty or FTS on a net income basis (after deducting allowable expenses attributable to the PE) rather than on a gross basis. It acts as a safeguard to ensure correct attribution and prevents the excess deduction of expenses.
8. Key Updates in the 2026 Rules
- Tabular Structures: Unlike the old Form 3CE which relied heavily on free textboxes for expense and payer details, the new Form 24 introduces a structured, tabular format to simplify data extraction, compliance, and automated validation.
- Redundancy Removal: Obsolete clauses referring to old provisions of the Companies Act, 1956 have been removed.
1. What is Form No. 24?
Ans:- Form No. 24 is a prescribed audit report required to be furnished under Rule 43 read with Section 59(4) of the Income-tax Act, 2025. It is applicable to non-residents or foreign companies earning income by way of royalty or fees for technical services (FTS) from India through a Permanent Establishment (PE) or a fixed place of profession situated in India.
2. Who should file Form No. 24?
Ans:- Form No. 24 is required to be furnished by:
• Non-resident individuals
• Foreign companies
• Any other non-resident entities
who earn royalty or fees for technical services from India and where such income is effectively connected with a Permanent Establishment or fixed place of profession in India. The form is certified by an Accountant as defined in section 515(3)(b) of the Income-tax Act, 2025.
3. Is Form No. 24 compulsory?
Ans:- Yes. Furnishing of Form No. 24 is mandatory where income by way of royalty or fees for technical services is taxable under Section 59 through a Permanent Establishment or fixed place of profession in India.
4. When does the requirement of furnishing Form No. 24 arise?
Ans:- The requirement arises when a non-resident assessee or foreign company earns royalty or fees for technical services from India under an agreement with the Government of India or an Indian concern, and such income is effectively connected with a Permanent Establishment or fixed place of profession in India.
5. What documents / information are required to prepare Form No. 24?
Ans:- The Chartered Accountant will require:
a. Complete books of account and records relating to the business of the Permanent Establishment (PE) or fixed place of profession in India for the relevant tax year.
b. Accurate computation of income earned by way of royalty or fees for technical services (FTS), ensuring such income is effectively connected with the Indian PE.
c. Documentation supporting the claim for expenditure (excluding those not allowable under Section 59) that is strictly attributable to the PE or fixed place of profession.
d. A copy of the agreement with the Government of India or the Indian concern under which the royalty or FTS is earned (Annexure A-2).
e. A detailed note on the intangible property (know-how, copyrights, patents, etc.) used, or the specific contract for which the fees are payable (Annexure A-3).
f. A descriptive note outlining the activities of the PE or the fixed place of profession in India (Annexure A-4).
g. Details of any change in the method of accounting employed compared to the previous year and its effect on profit or loss (Annexure A-1).
h. The Accountant’s Membership Number, Firm Registration Number, and a generated Unique Document Identification Number (UDIN) for the electronic certification.
6. What is the due date for furnishing Form No. 24?
Ans:- Form No. 24 is required to be furnished annually, at least one month prior to the due date for furnishing the return of income under Section 263(1) of the Income-tax Act, 2025.
7. What is the effect of furnishing Form No. 24?
Ans:- Furnishing of Form No. 24 enables computation of royalty or fees for technical services on a net income basis after allowing only such expenses as are attributable to the Permanent Establishment or fixed place of profession in India.
8. What is the structure of Form No. 24?
Ans:- Form No. 24 consists of:
– Main Audit Report: The core certification under Section 59 of the Income-tax Act, 2025, where the accountant certifies the amount of royalty or fees for
technical services (FTS) and its effective connection with the Permanent Establishment (PE) or fixed place of profession in India.
– Annexure – Part A: This section captures the General Particulars of the Assessee, including their name, address, Permanent Account Number (PAN), and the relevant tax year.
– Annexure – Part B: This section contains the Statement of Particulars relating to income by way of royalty or fees for technical services, detailing the books of account, method of accounting, details of the payer, and head-wise expenditure attributable to the PE.
– Specific Annexures (A-1 to A-4): Depending on the responses in Part B, additional detailed notes must be attached, such as the copy of the agreement (Annexure A-2), notes on intangible property (Annexure A-3), and notes on the specific activities of the PE (Annexure A-4).
9. What is the process flow of filing Form No. 24?
Ans:- The process flow includes:
a. The process starts with identifying whether the non-resident or foreign company has a Permanent Establishment (PE) or a fixed place of profession in India during the tax year.
b. All income earned via royalty or fees for technical services (FTS) effectively connected to the PE must be compiled, along with expenditures strictly attributable to the PE.
c. The assessee must engage an “Accountant” as defined in Section 515(3)(b) to audit these accounts and verify the correctness of the income computation.
d. The accountant prepares the audit report and mandatory annexures, including Annexure A-2 (Agreement copy), Annexure A3 (Note on intangibles/contracts), and Annexure A-4 (Note on PE activities).
e. The accountant logs into the e-filing portal to fill out the form, ensuring the inclusion of their Membership Number, Firm Registration Number, and a generated Unique Document Identification Number (UDIN).
f. The accountant must digitally sign the form using their Digital Signature Certificate (DSC) to upload it.
g. After the Accountant uploads the form, it appears in the taxpayer’s worklist; the process is only complete once the assessee logs in and “Accepts” the form.
10. What is the outcome after furnishing Form No. 24?
Ans:- Upon furnishing and acceptance of Form No. 24, the income by way of royalty or fees for technical services is assessed under Section 59 on a net basis, forming part of the assessment record.
11. Why is Form No. 24 important?
Ans:- Form No. 24 is a statutory audit certificate that ensures correct attribution of income and expenses and verifies that income is effectively connected to the Permanent Establishment or fixed place of profession in India. It prevents excess deduction of expenses and ensures correct taxation of royalty or fees for technical services earned by non-residents.
Form 24 Income Tax Rules 2026 pdf download
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